The Latvian state budget is suffering enormous losses because the saving of drowning companies attracts financial consultants not by means of open contests, but based on the fact whether or not they are related to the ruling political party, experts believe.

The state is possibly suffering tens and even hundreds of thousands of LVL with financial consultations from Prudentia. The financial consultation company Prudentia – founded in 1999 by investment banker Girts Rungains – was chosen by the government to provide it with services without first organizing a public contest. This means that, possibly, financial experts that could have offered their services at lower prices were automatically refused. Secondly, Prudentia‘s contribution to the saving of Latvia’s economy is viewed rather ambiguously by economic experts, often even negatively, Kas Jauns portal reports.

Prudentia was a chosen company to resolve the problems of Parex and airBaltic, which did not turn out to be cheap. Even though it is not revealed just how much of taxpayers’ money was used on financial consultations, it is unofficially known that it cost at least half a million LVL in airBaltic‘s case. The result, however, is nothing special – airBaltic is still trying to overcome financial problems. It is ironically said that the only notable achievement of the consultants was the offer to potential investors to purchase airBaltic shares published in Financial Times not too long ago.

Now Prudentia is consulting Liepājas metalurgs (LM). The so-called LM “creditors club” – Citadele bank, Latvenergo, SEB bank and the Finance Ministry – made the decision to attract a professional financial consultant in the last week of March. A corporate agreement was reached between the creditors and Prudentia on April 2. According to this agreement, a specific reward is set for the consultant – 15 000 LVL per week, Pietiek reports.

According to LM Council members Andris Denins and Gunts Vilnis, Prudentia puts the largest obstacles in the way of saving LM.

Latvian financial consultancy market already has such internationally famous auditor companies like KPMG, Deloitee & Touch and Ernst & Young, as well as a number of others. But Prudentia is the only one to receive orders without having to participate in contests. One of the possible reasons for this is said to be the relation of Prudentia‘s owners to the ruling political party in Latvia – Unity, the portal writes.

The Finance Ministry cannot give a clear answer as to why the state is purchasing financial services without first organizing a contest. Manager of the ministry’s communication office Aleksis Jarockis merely keeps citing different sections of the Public Procurement Law or the Public Service Providers Law. These sections mention cases when the organization of a contest is unnecessary (such cases are very different and can be interpreted in many ways).

Meanwhile, economic experts note that the state should announce contests. Economist and once the director of the Latvian Economics institute Raita Karnite notes that it would be more logical for the state to organize contests and choose the most beneficial offers. Otherwise it looks more like only those who are close to the ruling party are the ones to get the bets orders.

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